Professional skepticism in related party transactions is a very important phenomenon that needs to be withheld when it comes to designing procedures and protocol for related party transactions.Īs a matter of fact, it can be seen that it calls for auditors to remain vigilant and alert about any undisclosed related party transactions, as well as maintaining skepticism when it comes to identifying material misstatements in the transactions. Audit Skepticism in Related Party Transactions Secondly, they are also supposed to conclude if there is fair representation of the related party transactions in the financial statements, and if the disclosures meet applicable financial reporting framework. Firstly, they are supposed to recognize fraud risk factors that may lead to material misstatement of the accounts, owing to the act of fraud itself. When auditing related parties, the fundamental aspects that should be considered by auditors are two-fold.
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